Pensions of Ousted Lawmakers
Ousted Rep. Veon's pension about $60,000 :Source: http://www.post-gazette.com/pg/06335/742691-85.stm Friday, December 01, 2006 By Tracie Mauriello, Post-Gazette Harrisburg Bureau 22-year legislator and his colleagues also will receive free health insurance for life HARRISBURG -- Don't feel badly for state Rep. Mike Veon just because voters booted him out of office. Sure, he'll lose the free plane rides to Harrisburg and the $650-a-month car lease that taxpayers now fund, but he'll have free health insurance for the rest of his life and a pension more than double the state's per capita income. Voters replaced Mr. Veon, a 22-year legislator and the House's second-ranking Democrat, with Jim Marshall, a Republican Big Beaver councilman. Mr. Veon's downfall was his support of last year's unpopular pay raise and his status as the only legislator to oppose its eventual repeal. Mr. Veon's refusal to return raise money he collected before the repeal also boosts his pension by roughly $3,600 a year. If he begins collecting right away, his pension will be roughly $58,700. If he waits until next year when he turns 50, full retirement age for legislators, it will go up to about $62,500. The calculations are based on data provided by the State Employee Retirement System. Pensions are based on age, years of service, the average of the lawmakers' three highest annual salaries and a multiplier of 2 percent to 3 percent based on the retirement plan each legislator chose. Pensions for other state employees are calculated using a multiplier of 0.8 percent to 2.5 percent, depending on job classification. Those employees must wait until age 60, a full decade longer than legislators, to collect full pensions. In the private sector, multipliers typically are 1.5 percent to 1.8 percent but, unlike legislators, private-sector employees typically contribute nothing to their pension funds. Most Pennsylvania legislators have been contributing 7.5 percent of their pay since 2001 when they approved a new pension formula. The change allowed a 50 percent increase in retirement benefits for those who agreed to increase their pension contributions, which had been 5 percent. At the end of the month, 49 legislators will leave office, either because they did not seek re-election or because they were voted out in the May primary or last month's general election. A dozen of them are from southwestern Pennsylvania, and the pension cost to taxpayers for those 12 could total as much as $564,000 a year. Data used to calculate pensions for eight of them were released in the spring; information on four others was made available to the Pittsburgh Post-Gazette recently in response to a Right to Know request submitted earlier last month. Michael Diven, R-Brookline, who lost in the general election to Beechview Democrat Chelsa Wagner, has served almost six years. His average salary for the last three years was $67,507, and his pension plan calls for a 3-percent multiplier. That means he is eligible for an annual pension of roughly $11,800 beginning at age 50. If Mr. Diven, 36, starts collecting now, he would get about $5,800 a year. Some, such as outgoing Rep. James Shaner, D-Lemont Furnace, will collect more in retirement than they did on the job. Mr. Shaner, whose salary is $66,172 this year, will collect an estimated $71,000 a year in retirement. That's about $25,000 for his 12 years of service as a legislator and $46,000 for his 33 years as an educator. Mr. Shaner, who underwent heart surgery last year, did not run for re-election. Rep. Shawn Flaherty, D, Fox Chapel, who filled former Rep. Jeff Habay's unexpired term, is leaving office, too, but will not get a pension. Mr. Flaherty has served only seven months, not the three years required to be vested. The pension costs concern government watchdog groups such as the Commonwealth Foundation in Harrisburg. The state's pension liability will only grow in the coming years, according to a study by the foundation. Last year, taxpayers paid $116 million into the State Employees Retirement System. That annual contribution will have to grow to $1.2 billion over the next six years to fund the liability, the foundation said. "That's a massive increase in terms of spending. I don't see how the state can pay for it without a major tax increase," said Nathan Benefield, policy analyst with Commonwealth Foundation. Already, the State Employee Retirement System has a pension liability of more than $28 billion and assets of just $27 billion. Mr. Benefield attributes the shortfall to fluctuations in the stock market and to the more generous pension plan legislators approved for themselves in 2001, when stocks were performing well and the pension account showed a surplus. The unfunded liability can be lessened, Mr. Benefield says, if a defined-contribution system, similar to a 401(k) plan, is created for new hires. Contributions, rather than payouts, would be guaranteed so the fund doesn't fall into the red with changes in the stock market, he said. "Something has to be done," Mr. Benefield said. (Tracie Mauriello can be reached at tmauriello@post-gazette.com or 717-787-2141. )